"Investors will likely remain cautious until additional measures to solve fiscal problems in Greece and other European countries are realized. Also, risk aversion still looks high," said Lee Jin-woo at Mirae Asset Securities in Seoul.

Investors worried that Greece, Spain and Portugal may not be able to bring their budgets under control amid doubts over the fragile economic recovery in the euro zone, but some analysts said markets were overreacting to such concerns.

"We think those fears are a bit overdone," said CommSec market analyst Juliette Saly. "It's just that it came so soon after the global financial crisis that people have been concerned about contagion, but we think those concerns will be short-term and that Asia is really the engine of the global economy."

Separately, Credit Suisse research analyst Cem Karacadag wrote in a report that Asia's "growth and policy prospects will largely be a function of global output growth, on which we remain constructive. If global growth slows, we think Asia has fiscal and monetary policy flexibility to keep stimulating growth at home."

Shares of Kirin Holdings
KNBWY, +0.92%
(2503) slumped 7.4% with heavy trading volumes in Tokyo after the Japanese brewer said it has ended merger talks with unlisted Suntory Holdings, because of differences over whether the integrated entity would be listed. Read full story on Kirin's announcement.

Risk aversion continued to keep the South Korean market down as talk of receivership for Kumho Asiana Group units "increases uncertainties about the group's fate," said Choi Jai-sic at Daishin Securities. Kumho Tire
KMHOF
fell 5.8% and Asiana Airlines
ASAIF
gave up 5.7%.

In Singapore, Malaysian gambling concern Genting Singapore
GIGNY, +0.15%
(G13) fell 2.7% in cautious afternoon trading, giving up early gains despite news that it had received its operating license from Singapore's Casino Regulatory Authority. The opening of the casino by Genting Singapore -- ahead of Las Vegas Sands' much-delayed showpiece project in Singapore's downtown -- would bring a formal end to the Singaporean government's decades-long opposition to gambling.

In foreign exchange markets, the euro was buying $1.3695 from $1.3663 in late New York trade Friday, and 122.55 yen from 122.14 yen. The dollar was buying 89.49 yen from 89.38 yen.

"There was no tough talk on currencies, and no official statement as the G7 forum now defers to the G20 as the main global forum for joint policy statements," said Greg Gibbs, currency strategist at RBS in Sydney. He said the debt problems facing Greece, Spain and Portugal will remain a concern for markets.

Lead March Japanese Government Bond futures rose 0.17 at 139.10 points, while the 10-year JGB yield was at 1.355%, down one basis point.

Spot gold was at $1,066.70 per troy ounce, up $1.70 from New York trade Friday. RBS head of precious metals Charles Dowsett said that while the yellow metal hasn't yet been sought as a safe-haven "if the uncertainty [on the euro-zone debt crisis] continues, it will be positive for gold."

March Nymex crude-oil futures were up five cents at $71.24 a barrel on Globex, rebounding from steep falls on Thursday and Friday on the U.S. dollar's strength and sovereign debt concerns in Europe. "Crude looks a little oversold and it's moved pretty quickly, so I think there's a bit of bottom fishing here," said Mark Pervan, head commodities strategist at ANZ.

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